Dismissed

central Bank Of India v. Mars Communications P Ltd. & Ors.

DRAT17 Nov 2022REGULAR APPEAL/39/2015

Case brief

AI extract

What is this about?

Bank appealed the lower Tribunal's dismissal of its recovery application against several defendants. The Tribunal held that directors who executed documents in their Corporate capacity were not personally liable absent specific guarantees. The Tribunal’s view was found to be legally correct.

What did the court decide?

Appeal RA 39/2015 dismissed with no order as to costs.

central Bank Of India versus Mars Communications… — Contract and Commercial Disputes | DRAT (2022)

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RA 39/2015

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IN THE DEBT RECOVERY APPELLATE TRIBUNAL AT CHENNAI

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Dated the 17^th of November, 2022

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PRESENT: Hon’ble Mr. Justice S. Ravi Kumar CHAIRPERSON

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RA 39/2015

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[OA 67/2015 ( old OA 284/2006 of DRT-I, Chennai) on the file of DRT II, Chennai)

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Between

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Central Bank of India, “Chandarmukhi”, Nariman Point Mumbai – having branches among other places at

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Luz Church Road, Mylapore, Chennai – 600 004. Represented by its Principal Officer, And Senior Manager.

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……Appellant

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And

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Mars Communications P Ltd., Rep. by its Directors, having Registered Office at ‘Tass Mahal’ 10, Montieth Road, Egmore, Chennai – 600 008.

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S. Harini Vasini, W/o K. Satish Flat A-4, ‘Jayasree Apartments’ No.9 & 11, Ganesh Street,

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Gopalapuram, Chennai – 600 086.

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RA 39/2015

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S. Girija, W/o V. Sundararajan, 203, II Floor, Raheja Nests, Avvai Shanmugam Lane, Royapettah, Chennai – 600 014.

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V. Sundararajan, S/o Varadharajan, 203, II Floor, Raheja Nests, Avvai Shanmugam Lane, Royapettah, Chennai – 600 014.

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P. Kishorekumar, S/o N. Panjatcharam, C- 370, Second Street, Periyar Nagar, Chennai – 600 082.

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K. Kalpana, W/o P. Kishorekumar, C- 370, Second Street, Periyar Nagar, Chennai – 600 082.

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P.M. Satishkumar, S/o P. Murugan, 4, Ashtalakshmi Main Road, Second Street, Pallikkaranai, Chennai 603 102.

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T M Kamesh, S/o Murugesan, 286/3, Triplicane High Road, Triplicane, Chennai – 600 005.

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C. Mani, S/o Chellappa Naicker, 5/220, D.S. Nagar, Vandalur, Chennai – 600 048.

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K. Vijayan, S/o Kunju, 40, Gopal Chetty Street, Anakaputhur, Chennai – 600 070. …..Respondents

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Counsel for Appellant : Mr. B. Thilak Narayanan Respondents : Remained ex parte

RA 39/2015

ORDER

1. This Appeal is against Order dated 19.05.2015 in OA 67/2015 (old OA 284/2006 of DRT-I, Chennai) on the file of DRT-II, Chennai.

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2. Brief facts leading to this Appeal are as follows:-

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Appellant Bank herein filed the above referred OA for recovery of Rs.54,20,607.34p with future interest, from Defendant Nos.1 to 10. According to Appellant, Defendant No.1 is a Company, and one Mr. Govardhan, who was Managing Director of Defendant No.1 Company, executed all necessary documents, and subsequently, died on 26.01.2005. According to Appellant, Defendant Nos. 2 and 3 are the present Directors of Defendant No.1 Company. Defendant Nos. 4, 9 and 10 are guarantors and Defendant Nos. 3, 9 and 10 are mortgagors for the loan.

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RA 39/2015

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Defendant Nos. 1 and 5 to 10 remained ex parte .

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Defendant Nos. 2 to 4 filed Written Statement disputing the claim of Bank.

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Tribunal below, on a overall consideration of oral and documentary evidence, allowed the OA against Defendant Nos.1, 3, 4, 9 and 10 and dismissed against Defendant Nos. 2, 5 to 8. Aggrieved by dismissal of OA against Defendant Nos. 2, 5 to 8, present Appeal is preferred.

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3. During pendency of Appeal, Respondent No.8 died, and as Appellant failed to take steps against deceased Respondent No.8, Appeal against Respondent No.8 is dismissed as abated on 19.07.2022. In respect of Respondent No.10, Notice ordered was served and he is called absent and set ex parte on 14.10.2015, and for remaining Respondents, Notice is ordered through paper publication, and as none appeared on behalf of Respondent Nos. 1 to 7 and 9, they are also called absent and set ex parte on 23.08.2022, and arguments of Advocate for

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Appellant Bank are heard.

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RA 39/2015

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4. Learned Advocate for Appellant Bank contended that DRT erred in dismissing OA against Defendant Nos. 2, 5 to 8, in spite of evidence showing their liability. He submitted that Appellant Bank made out case against them, but Tribunal below erred in holding that there is no personal liability against them. He further submitted that in the Proof Affidavit at para 11, Officer of Appellant Bank clearly stated that Defendant No.2 undertook to pay outstanding and executed necessary documents for renewal of Cash Credit Limit availed on behalf of Defendant No.1 Company. He submitted as Tribunal below erred in dismissing the claim of Appellant against Defendant Nos. 2, 5 to 8, the same has to be set aside, and Appeal has to be allowed.

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5. I have perused the material papers including OA and Proof Affidavit of K. Santhana Krishnan, Chief Manager of Asset Recovery Branch of Appellant Bank.

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RA 39/2015

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6. It is not in dispute that loan is availed by Defendant No.1 Company of which Defendant Nos. 2 to 8 are the Directors (present and past). It is also not in dispute that Defendant Nos. 4, 9 and 10 are guarantors for the loan availed by Defendant No.1 Company. In the OA, it is specifically pleaded that Defendant No.2, undertook to clear the outstanding and executed documents on 19.02.2005, but she failed in fulfilling her undertaking. According to Appellant Bank, all the Defendants are jointly and severally liable.

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7. As seen from record and documents, Defendant Nos. 2 to 8

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are arrayed as Directors (present and past), and there are no documents executed by these Defendants making themselves personally liable for the loan availed by Defendant No.1 Company. It is not in dispute that at the time of availing loan, one Mr. Govardhan was Managing Director of Defendant No.1 Company, and he, in that capacity, executed all necessary documents, and after his death, Defendant No.2 succeeded Govardhan, and she operated Bank account as Managing Director of Defendant No. 1 Company.

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RA 39/2015

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8. According to Learned Advocate for Appellant Bank, Exhibit A24, which is a Letter dated 19.02.2005 executed by Defendant No.2, would make her personally liable for the outstanding. But, as seen from Exhibit A24, it only reveals that Defendant No.2 informed the Bank that she has taken over as Managing Director of Defendant No.1 Company and controlling all other group of companies, and undertook to adjust the outstanding including interest, on or before 28.02.2005, and requested Bank to extend similar credit assistance to the Company to overcome tight liquidity position.

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9. According to Learned Advocate for Appellant Bank Exhibits A25, A26, A27 and A28 would bind Defendant No.2 personally. Exhibit A25 is a Demand Promissory Note dated 28.02.2005 executed by Defendant No.2 as Managing Director of Defendant No.1 Company. A reading of this document would disclose that it is executed on behalf of Defendant No.1 Company, but not in her personal capacity. So also, the other documents namely Exhibits A26, A27 and A28. Though in the Proof Affidavit, it is

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RA 39/2015

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contended that Defendant No.2 is personally liable in view of these documents, but, the contents of documents do not show that Defendant No.2 executed these documents in her personal capacity. On the other hand, these documents clearly indicate that, they are executed on behalf of Defendant No.1 Company, and undertaking given by Defendant No.2 is also on behalf of Defendant No.1 Company, but not in her individual capacity.

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10. Tribunal below specifically recorded a finding that Defendant No.2 is not personally liable for the loan amount, so also, the other Defendant Nos. 5 to 8, because they have not given any guarantee nor executed any documents. I do not find wrong in the findings of Tribunal below, because these documents relied and referred to by Advocate for Appellant Bank, are not executed by Defendant No.2, in her personal capacity, and they are executed as Managing Director of Defendant No.1 Company.

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11. On a scrutiny of material, I am of the considered view that Tribunal below was right in dismissing the claim against

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RA 39/2015

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Defendant Nos. 2, 5 to 8, and there are absolutely no grounds to interfere with the findings of Tribunal below.

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12. For these reasons, it is held that Appeal is devoid of merits and liable to be dismissed.

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13. In the result, Appeal RA 39/2015 is dismissed with no order as to costs. All pending IAs, if any, stand closed.

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[Dictated to Athistamani, PS transcribed by her, corrected, signed and pronounced by me in open court, this 17^th of November, 2022]

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Sd/- [ Justice S. Ravi Kumar ] CHAIRPERSON

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central Bank Of India v. Mars Communications P Ltd. & Ors.

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central Bank Of India v. Mars Communications P Ltd. & Ors.

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